However, Slovakia, the smallest and most open of the three countries, is powering ahead, notching up 2.7 per cent annual GDP growth in the second quarter, thanks largely to the European motor industry.

Vladimir Vano, chief economist at Volksbank Slovensko, took a look at why Slovakia is outperforming its peers, and found that the the good results (industrial production is rising by an annual 10.1 per cent) are largely the result of outperformance in two sectors – cars and electronics.

“The overall growth can be credited to a handful of major Slovak industrial sectors, such as production of transport vehicles (+42 per cent year-on-year) and production of electrical equipment (+10.3 per cent year-on-year),” he wrote in a report.

Slovakia is benefiting because it largely specialised in these two sectors as it has integrated with the rest of the EU. As the economic crisis bites, manufacturers are looking to shave costs, and Slovakia’s cheap but qualified workers, as well as the large level of previous investments in both sectors are luring manufacturers to shift still more productive capacity to Slovakia.

Slovakia has the world’s highest per capita car production with three large factories owned by Germany’s Volkswagen, PSA Peugeot Citroen of France and Kia, the South Korean group, as well as a raft of parts suppliers. This year investments of about €1bn in expanding production lines are starting to take effect, further boosting output.

“…even industries facing sluggish or declining demand try to streamline their costs by making higher use of their facilities in cheaper CEE countries, while downsising more radically those with a higher cost base, usually in western Europe,” writes Vano.

This is one area where being in the eurozone is actually helping a country. Many investors are choosing Slovakia over Hungary and the Czech Republic because it is a member of the common currency, which takes away currency risk. Other CEE countries have seen their currencies sag against the euro, but swings in the forint, zloty and koruna have been quite wild, adding an element of uncertainty to investment decisions.

Source: Volksbank

Vano says that the backbone of Slovakia’s performance has been its improvement in net exports. “In 2011, Slovakia recorded its best foreign trade surplus on record, to the tune of €2.4bn (3.5 per cent of GDP). With imports slowing faster than exports, the trade surplus jumped to an identical amount during just the first half of 2012 (€2.5bn). That means a staggering 161 per cent increase from the same period last year, and a more than four-fold jump in the second quarter alone.”

Source: Volksbank

The question is how long Slovakia can keep up its strong performance, especially as domestic demand, retail sales and government investment all show signs of stagnation or slump, and the government is continuing to tighten the fiscal screws to keep the deficit and public debt under control?

Source: Volksbank

Real GDP growth should slow in upcoming quarters as figures for upcoming quarters will be compared to the high base of late last year. The slowdown in western Europe should also be a drag on the economy – but Slovakia will still be doing fairly well.

Martin Balaz, an analyst with Erste Group, says: “We expect Slovak economy to slow down in the next quarter due to slowing industrial production, which has been the main driver of GDP growth this year. Slovak as well as eurozone sentiment indicators (PMI, IFO, ZEW) also point to a slowdown. In spite of this, Slovak economy is likely to record growth of 2 per cent for the year.”

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Bratislava as it was up to the 1960s

http://www.youtube.com/watch?feature=player_detailpage&v=YEfgueY172g#t=332sHistory of Bratislava - Pozsony - Presporok - PressburgBratislava
City capital of Slovakia. Settled first by Celts and Romans. As Pressburg, it developed as a trade centre and became a free royal town in 1291. The first university in what was then Hungary was founded there in 1467. The city served as the Hungarian capital (1541 – 1784) and was the seat of the Diet (parliament) until 1848. The Treaty of Pressburg (1805) was signed here by Napoleon and Francis II following the Battle of Austerlitz. After World War I, on the formation of Czechoslovakia, it became capital of the province of Slovakia, and it became the national capital on Slovakia's independence in 1992.
Bratislava is an important road and rail center and a leading Danubian port. A well-diversified industry produces textiles, chemicals, and metal goods; during the Communist period, heavy industry was focused on the production of armaments.

Forests, vineyards, and large farms surround the city, which has an active trade in agricultural products. It is also a popular tourist center. A Roman outpost called Posonium by the 1st cent. A.D., Bratislava became a stronghold of the Great Moravian Empire in the 9th cent. After the death of Ottocar II (1278), Bratislava and much of S and E Slovakia fell under Hungarian rule. From 1541, when the Turks captured Buda, until 1784, Bratislava served as Hungary's capital and the residence of Hungarian kings and archbishops.

The kings continued to be crowned there until 1835, and Bratislava was the meeting place of the Hungarian diet until 1848. Inhabited largely by German traders before the 19th cent., the city then became predominantly Magyar. In the 19th cent. it was the center of the emerging Slovak national revival, and after the union of the Czech and Slovak territories in 1918 it was incorporated into Czechoslovakia. From 1939 until 1945, Bratislava was the capital of a nominally independent Slovak republic that was governed by a fascistic pro-German regime responsible for the murder of tens of thousands of Czechs and Jews. The Univ. of Jan Comenius (1919), the Slovak Academy of Sciences, a polytechnic university, a national theater, and several museums are in the city. The 9th-century castle, above the Danube, was rebuilt in the 13th cent. St. Martin's Cathedral, the Franciscan convent and church, and the old town hall are also 13th-century buildings. The new town hall occupies an 18th-century palace, formerly the residence of the primates of Hungary; the Treaty of Pressburg was signed there in 1805.

About this Blog

Decided to start a Blog about Bratislava, and the politics of the country because most of the blogs about Slovakia and Bratislava in english were either brief entries from travellers passing through Bratislava with no idea about the place and commented largely about beer and other "vital issues" like that, or the more serious ones usually run by moronic americans preaching their judaeo-christian hyper-religious extreme-pro-capitalist & oligopolistic anti-democratic religion coupled with their famed grasp of geography.

There are also some Brits that have a slightly better grasp of geography than their US cousins. However brits are largely trying to recreate colonial glories and their grasp of facts in Bratislava tends to be confused even at the BBC. Most of the experiences the brits have are from lager-lout type pissups in Bratislava and use that crap movie "Hostel" as their intellectual compass.

This blog aspires to discuss serious matters with humour and no-nonsense analysis. Its unapologetically intellectual and refuses to allow this term to be ascribed with a negative meaning the way that the word liberal has become negative in the US.

Clearly there is much love about this great city and country, but without pandering to any special interests or prejudices.

Comments are welcome and will never be deleted or blocked if they offer a contrarian view.

About the bear in the picture.
Macko Usko is a bear with a floppy ear, who is a celebrity in Slovakia and the mountains behind him (Tatra) offer the best skiing after the alps. Macko has attitude and is an opinionated bear as you can see.